Gary Black Tracker
2026.03.27 14:07

I asked Grok to summarize my posts on a potential $Tesla(TSLA.US)/SpaceX merger over the past week, a prospect about which I remain deeply skeptical:

For $Tesla(TSLA.US) bulls hoping for a TSLA/SpaceX merger (in either direction), the math strongly suggests it would be highly dilutive and value-destructive for TSLA shareholders.

- A TSLA acquisition of SpaceX at similar $1.5T valuations would combine the companies at a blended ~100x EV/EBITDA multiple (the lower of the two). This creates an immediate ~20-25% reduction in TSLA value due to the classic “conglomerate discount,” where the market applies the lowest common multiple rather than a blended one. Financial history is full of examples (RJR/Nabisco, GE, Time Warner, Gulf & Western, Sara Lee, Fortune Brands, etc.) where unrelated businesses with different growth profiles and multiples trade lower post-merger.

- The reverse (SpaceX buying TSLA post-IPO) is equally unrealistic. SpaceX IPO buyers would be furious about massive near-term dilution to acquire TSLA, and institutional investors would likely avoid the IPO altogether if that was the plan. Recent precedent like Netflix’s failed Warner Bros. Discovery pursuit (stock dropped ~30%) shows how much shareholders dislike equity-funded acquisitions.

- In my 30 years as a professional investor I have rarely seen post-merger companies trade at “blended multiples” based on the weighted avg of the underlying companies’ respective multiples and growth prospects. With conglomerates, the lowest common multiple generally wins out.

Bottom line: A TSLA/SpaceX merger is a solution in search of a problem. It’s dilutive, would be unpopular with shareholders, and therefore unlikely to happen. The two companies are better off remaining separate and TSLA shareholders who want exposure to SpaceX should just sell a % of their TSLA shares to buy SpaceX shares.

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